Porter’s five forces model is a commonly used tool that businesses can use to analyze their external environment, and I am going to look at how they have been applied to a company that is already thriving, namely Apple. The first of Porter’s forces is the degree of existing rivalry, which is based upon the number of competitors that are of comparable size. For Apple, some of their existing rivalry would be other computer companies such as Dell, HP, ASUS, ACER, Sony, and other computer manufacturers. The next force is the threat of potential entrants. In Apple’s case some entry barriers for new companies could be brand loyalty, and large startup costs, yet because Apple’s computers are highly priced there could also be an opening for computer companies that market towards customers with a lower price range.
Porter’s third force is the Bargaining Power of Suppliers. This means that the ability of a firm to negotiate good terms is influenced by the number of firms a company relies on. Apple has a high bargaining power over their suppliers because they are able to outsource much of their manufacturing and they also have been able to vertically integrate, which means produce some of their own supplies, which has allowed Apple a great advantage in the competitive market. Bargaining power of buyers is the next force which a firm is reliant on customers. There is a very high demand currently for Apples products and what gives them a great advantage is that customers see them as a unique product, where the substitutes (i.e. other computers) just do not compare. The last force is the threat of substitutes. These are products that are not competitors, but could “fulfill a strategically equivalent role for the customer.” The great thing about Apple is that they have already considered these substitutes and have branched out their company to support substitutes such as the iPad and iPhone.
Thanks, this really helped with my uni work!
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